After reporting U.S. consumer sentiment at an eleven-year high in the previous month, the University of Michigan released a report on Friday unexpectedly showing a sharp pullback by its consumer sentiment index in the month of February.
The University of Michigan said its preliminary consumer sentiment index for February tumbled to 93.6 from the final January reading of 98.1.
The steep drop came as a surprise to economists, who had expected the consumer sentiment index to edge up to a reading of 98.5.
The unexpected pullback by the index reflected deteriorations in both consumers' assessment of current conditions as well as their expectations.
The current economic conditions index slumped to 103.1 in February from 109.3 in January, while the index of consumer expectations fell to 87.5 from 91.0.
Richard Curtin, the survey's chief economist, said, "Consumer optimism slipped in early February due to renewed concerns over employment and wage growth as well as a diminished outlook for the domestic economy."
"Although confidence reversed the January gain, returning to the December level, the Sentiment Index was still higher than any other time since January 2007," he added.
Curtin said the drop in consumer sentiment was larger among residents of the Northeast and Midwest, who had to cope with unusually harsh winter storms.
On the inflation front, the report said one-year inflation expectations jumped to 2.8 percent in February from 2.5 percent in January, while the five-year inflation outlook edged down to 2.7 percent from 2.8 percent.
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